Can SEC Crypto Guidance Survive a New Administration? - DEX in the City

Transcript

Hi all, and welcome to Dacks in the City, where the wallets are cold and the takes are hot. First, we have Jesse, Web3 prosecutor turned Web3 protector at Ribbit Capital. And V from the SEC to Web3. And I'm your host, Katherine KK, fluent in TradFi and conversant in deep tech over at StarkWare. We have an incredibly special conversation today and two incredible guests, including Commissioner Hester Peirce and the Chief of Operations of the Crypto Task Force, Sumera Yunus. We are so thrilled to have them on, but before we get going, remember, we're lawyers, but we're not your lawyers. So, nothing you hear on Dacks in the City is legal or financial advice, and it

doesn't create an attorney-client relationship. For the fine print, as always, check unchainedcrypto.com. Before we continue, here's a word from our sponsors that make this show possible. >> Bitcoin changed how money works. Cetera changes how Bitcoin scales. With a trust-minimized BTC and a native stablecoin, CTUSD, Cetera enables Bitcoin capital markets with lending, privacy, Bitcoin yield, and more. Get started at cetra.xyz/unchained. >> Etherfi is giving Unchained listeners 15% cash back on food and ride apps. And that's on top of the 3% you get on everything else. Your bank is charging you to use your own money. I switched.

Go to ether.fi/unchained to claim your discount. >> Multichain Advisors is an emerging technology growth firm that has helped create 50 plus billion dollars in enterprise value for 80 plus clients over the past 4 years. They're the partner to help navigate markets. Build real traction today at multichainadv.com. >> And we're back. So, as I mentioned, we are just thrilled to have two very special guests today from the Securities and Exchange Commission. Uh Sumera Yunus, who is chief of operations at the Crypto Task Force, and Commissioner Hester Peirce,

who will be joining us momentarily. This is actually perfect because one of the reasons we started this pod is to amplify female voices in crypto. Obviously, Sumera and Commissioner Peirce are not specific to crypto. The SEC does a lot of other things outside of crypto as the three of us know. However, it's wonderful to know and to acknowledge that there are a whole host of very powerful, brilliant women across the private sector, but also across the public sector and within the government. So, it's really fantastic to hear their insights occasionally. And I will also say as general counsel in this space, um it's important to have transparency and an open line of communication with your

regular leaders as market participants. And even if crypto is not regulated by the SEC, or parts of crypto, it's important to understand how regulators think. So, let's start with Sumera. One of the things that we feel like is really important to cover at the start and that our listeners want to know is, let's be honest, what does the task force, what does the SEC's crypto task force actually do day-to-day? Like, what are your focus areas? How many submissions have you reviewed? Give us more insights about what your days look like.

>> Thanks so much for having me on. And before I begin, I just want to give the SEC disclaimer. Anything I say today does not represent the views of the Commission, the chair, the other commissioners, or the staff. They're my personal views made in my capacity as chief of operations of the Crypto Task Force. So, speaking of the Crypto Task Force, what do we do? We do we do a lot. It's been quite busy since we launched. It's been over a year now. But, as you know, we hit the floor running. And ever since then it has been kind of a real fire hose of an experiment. Initially when we first launched one of this the the prime imperatives was to rebuild trust with the industry. We were coming

out of a climate where we really had an environment where people did not want to talk to us and I think to do good regulation you need to have that open channel of communications. And so we worked really hard to develop that. We went through the round tables. You were on one of our round tables and this was a way for people to get back in the building to start having some of the foundational conversations we needed to have in the space. Moving forward after we kind of reestablished that trust and that communication line, we issued guidance in areas that we felt didn't need further action from Congress or more significant rulemaking.

You know, we called it low-hanging fruit. What are the things that we can clarify instantly that we know there is clarity on and so we issued different statements from the staff. And now we're in this phase where we are thinking about long-term robust actions that we can take that will be durable, you know, as administrations change or as developers build that they can rely on. And one of the best things that we can do in that space is have rule makings that address places there are still gaps or uncertainty. And so the staff is hard at work on doing that. The task force works closely with the staff, but our day-to-day in the beginning was just lots of meetings, lots of engagement, reviewing, you know, the hundreds of written input

submissions that we received to Commissioner Peirce's initial request for comment. And now we're really in the pens down part. We're reviewing rule making drafts, um, where that's possible, working on commission statements, you know, things along those lines. So a lot more time just with our screens and and reviewing documents and and writing where appropriate. You're doing a lot of work. Like you're working very hard and we're seeing the results of that. You know, we're seeing the guidance. We're seeing the commentary from the commission, which is fantastic, especially because you're right. Like prior to this SEC administration, there was a lack of engagement because there was a pervasive fear of engagement, which is as I think we all know and understand is is not a good way uh to

operate. Uh it's not good for anyone. I mean, if it's not good for TradFi, it's not good for crypto. So, I love seeing that open dialogue. And I also need to say as an aside, one of the reasons I knew I immediately liked Sumera is when I was at the commission, uh you know, prior to the financial surveillance and privacy roundtable, uh we were having lunch and there was no diet Cokes available. And people who know me know that I I need my one a day fridge cigarette >> Yeah, I was going to say, I thought we call them fridge cigarettes.

>> operation. Sumera was kind enough to direct me to a to a vending machine to facilitate that. Uh and and fantastic, we have Commissioner Peirce who has joined us as well. Uh so be Not at not at all. It all happens to the best of us, you know, good old >> on this call? We're so happy to have you both. >> It's amazing. We are so we are so thrilled to have you both and, you know, Sumera was just talking more about the how the crypto asset task force uh the crypto task force operates day-to-day, but one of the questions you mentioned the roundtables. You mentioned

the roundtables. Uh I love the roundtables because it really underscores your emphasis on transparency and engagement with with the industry. Uh what's the internal process for turning a roundtable or or thinking about those conversations and thinking about that content and turning that into or considering that in actual guidance. So, I I'll direct that one to Commissioner Peirce. >> Uh sure, and I should say before I begin that my views are my own views as a Commissioner and not necessarily those of the SEC or my fellow Commissioners.

Um I So, you're you're asking about the process for taking what we learn at a round table or at round tables and converting it to guidance? >> Exactly. Exactly. >> it it's just one input, um a very helpful one. I find it really helpful when you have multiple people interacting with each other. Um you know, in response to the same questions in the same conversation. So, it's definitely one useful input. The written input that we're getting is also helpful. And then, you know, all the meetings that we're having. So, I think it's just a combination of those things.

Um I go back and watch the round tables again to, you know, cuz I feel like there's a lot. And so, um I want to know whether I'm missing anything. And um so, I feel like that's you know, it it's just an input into the process, basically. Yeah. >> Yeah, and I will say I know as Commissioner Peirce says, we revisit them. It's difficult right in the moment to digest everything, to think about follow-up questions. And the beauty of them is we have published them all on our crypto task force website. So, folks can go back and look at areas that are particular interest to them. I know the staff does this, and I think that's a really important point to note. When staff is now in the process of rule making, they have that as a a really great resource to use. They can go

listen to those conversations, and then they know area expert subject matter experts that they can reach out to that, you know, we we did curate for those round tables. And we were speaking about AI earlier before we started. >> how do you say AI for that around table? >> Well, I didn't know this till very recently, but I can literally this was in a public website, not in our internal um systems, but I can ask it like what was KK's main point? What is she most concerned about on this issue? And then tell me the two people with the strongest views on this and what their main points were. And I was able to like really look at that and then you can and it gives you the timestamps, right? So then I can go later and look at that or relisten to it because sometimes I'll

look I know somebody has brought up this point. I really like how they approached it, but if I was just left to my own devices, that's gone into a black hole forever. Now with both the fact that we have them available for future viewing, but that we can engage in in a way that I think is unprecedented really superpowers the impact of those roundtables or any other dialogue that we're engaged in. >> That's amazing. We actually before everyone joined, we were talking about the multitude of uses for AI for efficiency purposes. Everything from me using it to help my husband service head coach of our son's baseball team to distilling large quantities of information in a more efficient manner.

Um, so that brings us to another question. You know, for both of you, either or, there's so much going on in crypto. And you know, one of the things that we've always said on this podcast is the difficulty in regulating this space is that there's a lot of apples and oranges, you know, NFTs and tokenized securities and L2s. How do you prioritize the multitude of issues that are arising right now, um, you know, that that may or may may or may not ultimately come under the jurisdiction of the commission?

>> Well, I mean, I think it's certainly difficult um and we're not making everyone happy with how we prioritize, but I think we had to start out by sort of just figuring out what we could say was outside of our jurisdiction and then move to the things that are inside the jurisdiction and then work on issues that are particularly technically or legally challenging there. Um, and so, you you will see rulemaking um coming and I think that just takes longer, too. So, it's sometimes it's a question of what uh you know, what what we can do quickly versus what will take a little bit longer um as well. So, um but you know, we want one of the big areas

that's been of interest um has been tokenization of securities and that's an area where it's clearly within our remit. It it it touches on a lot of different things and so we're thinking about a lot of issues related to that. Um and then the issues that we had we had seen come up during the roundtables and even before the crypto task force started, there were a lot of questions about a lot of things. So, we kind of had a priority list, I guess, going in, but we're we're also always looking for input on how to set that priority list. Sumaira, I don't know if you have anything to add on that since you're in it day-to-day.

>> Yeah, definitely. I think the organization that we had in the onset of the CTF was really helpful in terms of what we'd already heard and, you know, thinking what what answers can we provide quickly. Moving forward, though, engagement from industry is so important. We're going to hopefully get congressional direction and then we have so many conversations and themes appear, right? So, if we hear from three, five, nine practitioners the same issue or question, then we know that this is something that the market demands an answer for right now. What can we do? Can we answer it or is it something we need to contemplate in the rulemaking process, but that external input is really important to us and it really has helped direct it. And then we

have no action requests or other exemptive requests come in and those also help guide us in terms of what are the real issues that need answering and that helps direct us as well, but I think sometimes I will hear in offline conversations the same issue coming up and again and again, and I say you need to formally come in. You know, you'll hear about people on site, bars, and conferences speaking about it. You'll hear about it on podcasts again and again, but no one is engaging the building on it. When that doesn't happen, it's difficult for us to justify prioritizing that when we have so many live issues before us. So, if there is something that you consistently are facing as a practitioner or in the industry, then it's important that you

actually reach out to the building and then make that a heard to us in a formal way as well. It doesn't have to be obviously something. It can be a call. It can be an email. It doesn't need to be something super substantive. >> Yeah, I I think that's a really good piece of advice. I wanted to to ask something sort of related to, you know, all the work you're doing and how you're deciding what to prioritize. So, I I was at at the SEC as a staff attorney. Most of that time was in the enforcement division. Um but for like the last 9 months of my time there, I was chief counsel of the legislative affairs office. And one of the coolest parts of that job was um being able to provide technical assistance to Congress on draft legislation that they were working

through or considering. So, my question is, you know, we know that Congress has been working on the Clarity Act for a while now. Um but like you said, right? The market needs guidance, the market needs rules. So, it's not like the SEC can just, you know, stand by and wait for that. Has it been really challenging to sort of think about where you want to move forward knowing that, you know, this is pending in Congress, there are still a lot of live and some very controversial issues that Congress is trying to work through? Like how do you balance that and how do you coordinate with Congress to make sure that, you know, what you're doing is aligned with what you think they're

going to do. >> I imagine that was >> I think that um there we have authority and Congress wanted us to use the authority that we already have and and so part of that is easy and I think part of it is just saying to people, "Hey, some of this stuff is not actually in our jurisdiction. If you want it to be in someone else's jurisdiction, maybe it already is, but if you want it explicitly to be in our jurisdiction or someone else's, you're going to you know, Congress needs to know that." That that's an area where if they want to fill a gap, there's a gap there.

And and then I mean, I think what we're doing is generally aligned with what we know what Congress is trying to do. We've all seen drafts of the Clarity Act, so we we know kind of what's what's in order and and we do know some of the issues that are particularly sensitive. I think what we're doing just helps inform that broader congressional effort and we're certainly not trying to step on any toes. They're They They They have the pen when it comes to writing the law and we we will do what they say that we should do, but I think the steps that we're taking both independently and then together with the CFTC are are going to do a really nice job at laying the groundwork

for joint rulemaking and other cooperation with the CFTC so that we can get whatever they want us to put in place online faster. >> You guys talking Oh, no, go for it. >> I was going to say we're definitely sensitive to Congress's intentions here. We've seen the different iterations of the Clarity Act and so knowing that we can also move forward knowing we're not necessarily working in a space that there may be gray area and we would have to change our our work or approach as a result of Clarity.

>> Luckily, you guys like opened the floodgates and people seemingly have responded with a host of different inputs, you know, the submissions you were talking about, the round table obviously. I know you made an exhaustive effort to go around the country and meet with different teams, sort of prioritizing the smaller teams. That's a lot. Thank gosh for AI to help out, but also your guys' experience and brains. I wonder, are you and you know, as crypto has grown, we're realizing it's not a monolith anymore, and there's going to be um coalitions that build up within it and people with different opinions on on what's a priority. Guys, like, have you seen different goals and priorities from the smaller teams versus the larger teams? And how do you how do you think

about that interaction as you move forward? >> I mean, for small teams, it's just really difficult because they can't afford lawyers. And frankly, if they get lawyers, they're, you know, without some guidance from the SEC, there's not a lot that lawyers can tell them about how to move forward. And their funding is running out, right? So, their timeline is just so much more constrained. Um so, I feel like there's definitely um I mean, a frustration from the smaller projects that that I I get. Um In terms of what what they want, I mean, I I think they would just like us to tell them what to do so that they could

just go build their stuff. And and the the the larger um the larger market participants in this market, I think, are more eager to shape the policy um because they have the bandwidth to work on shaping it. So, it's more like, you know, small guys, tell us what to do and we'll we'll figure out how to do it. And the bigger guys are saying, "Hey, we have some really good ideas about how you should do things." Um so, that's what I would say is the difference I've noticed. I don't know, Sumera, what what you've seen.

>> Yeah, and those two things are actually they they work well together, right? We have resources with players who are either legacy players or have been around and they have deeper pockets so they can invest in some of like the legal analysis or the advocacy work. And then we have smaller teams who can actually leverage the results of that work. For us it's been really really important to create a framework which small builders can rely on and they can access the capital markets through and that's something we've been sensitive to throughout this process. We don't want to create an environment in which you need seven or eight figures just to put your foot in the door. I think that's really criminal and we want to avoid that. So a lot of the guidance we put out we really try to make it broadly

applicable so anyone can rely on it. As we move forward to rule making we're very thoughtful about how is this going to impact everyone on the spectrum. So crypto on the road was a great way to get out there but even without that without that sort of program, everyone should know we do have an open door policy. You don't need a special access pass to access your regulator. We have a crypto task force website which has a meeting request page. Anyone can request a meeting with us. We don't want this to be a situation in which a handful of law firms or a handful of entities are the ones who have access. We want to hear from anyone who has like a serious developed idea in this area. You know,

and I I do pride ourselves in having been accessible. If you don't want to meet with us, you can submit written input. We want to hear both people who have concerns about the approach we might be taking so we would not ever try to be in an echo chamber of just hearing from one one voice and we've tried, you know, pretty aggressively to make pathways open for for any person. >> I love that and I oh, sorry, V. I was just going to mention really quickly. I have a good friend who's a founder of a very small company and a couple years ago he responded to Commissioner Peirce's tweet when you were in Chicago at some point and had a meeting and he was just kind of stunned. He said, "I can't believe she responded and and we met and had

coffee." And I was like, this is this is how it should work. Like and it's it's a very American concept to have that access and engagement intellectually with your regulators. So I I really you know want to take a moment just to say thank you for you know kind of walking the walk and talking the talk about having that you know communication and and and transparency. >> Well, I I appreciate that although I will tell you that not everyone >> being nice most nights though. >> Yeah. What's that? Not everyone is that is that positive about the the prospect of being >> I know there were all >> Yeah.

I got a nice response the other day saying like, why would anyone ever want to meet with you? And I was like, well then you don't have to you don't have to. >> You don't have to. Yeah. So you're you're you're mostly beloved Commissioner Peirce. So I'll I'll say that with confidence. >> it's pretty universal. >> Yeah. >> Um so I I had a quick I just had a quick follow-up question for um what Samira was just saying. So I you know, I think making sure that your that the door is open for conversations with both you know, small startup teams but also more established companies is really important. But I wonder if you think about that also in the context of you know, you guys are thinking about coming up with compliance pathways,

right? So if you're a token issuer for instance, like it shouldn't cost you $2 million and again a team of like seven lawyers to launch your token um or to register in some other way. So I wonder if you think about that in terms of like creating pathways for crypto to come into compliance. >> Yeah, absolutely. I mean I think that's one of the things that we're we're working on with our rule making is to you know, but let the regulation be proportionate to the amount of money that you're raising um because once you start raising uh large amounts of money it's it's I think reasonable to say hey you know, you ought to be able to pay a lawyer with some of this and figure out how to make sure you're getting the

disclosure right um but they're they're great agents and I I think that that's not only true in crypto, that's across the board. We we do try to look at the size of the entity and the size of the fund raise and try to have things be reasonable and in in in relation to that size. >> Yeah. Yeah. >> That's more like reasonable more than anything else. You're right. Like there needs to be some degree of ownership when you scale and you know, when you have a deep pocket to pay the lawyers. Um one one thing I just wanted >> I certainly don't want the large projects to spend all their time all their time and money on lawyers either.

>> No. >> So but I I think we can get to a good point where um at least certainly a better point than where we've been I hope. Sumera you were going to say something. >> Yeah, I was going to say we've been trying to be very mindful of that in our proposal drafting but you know, it's really important to reiterate that we need feedback on those proposals. So there are questions in there if it isn't workable, that's the time to really let us know. The rule making teams are always open to engagement as well. You can continue to leverage us as well as a resource but at that point you're really going to want to work closely with the rule making teams and give them input on where it's not workable for every part of that spectrum, right?

>> Yeah. >> And that doesn't require you answering every letter every question that is in a proposing release or you know, if you have a very specific issue you should feel feel to send that in to us. It doesn't have to be a formal letter. It can be a an email. Um it will be publicly posted if it's a comment on a rule making. But that then enables other people to say, "Hey, yeah, I also have that concern or I have that problem." And so, um it it doesn't have to be a big exercise. Just if you see something you don't like, tell us.

If you see something you like, you can tell us that, too. >> Tell you the good stuff and not just the bad stuff. Yeah, yeah. So, really quick before we move on to a different topic, I wanted to double click on one aspect of the legislation piece. And only because I I don't know if others have observed this, but you know, for the past year or so, at every crypto conference, particularly the ones that skew institutional, there's been almost a singular focus on three topics, you know, tokenization, including tokenized security, payments, and stablecoins. With maybe privacy as the the next conversation as you talk about markets moving on chain. And obviously, there's been a real focus and discussion on the stablecoin yield question as it

pertains to legislation. So, you two alluded to how you kind of support and communicate with legislators through this process. But how have you kind of served in this process or surrounding that question specifically? Is it more of kind of an educational discussion as to when that question uh raises uh you know, securities-oriented risk? Or has more specific engagement on the stablecoin yield question in particular? >> I mean, the stablecoin yield question is really outside of our purview. Um I think that there's a lot of interesting stuff happening with tokenized money market funds. And I I suspect that those yield conversations

may um may shed some more uh attention on on on money market funds, but but again, we've taken the the position, which is consistent with the statute, that that this those stable coins are not securities, and so they're not within our remit. >> Fantastic. And and I think that line drawing has been one of the the best aspects of the kind of guidance that we've seen so far. Um and it's been very thoughtful, frankly. Uh And it brings us to another aspect of all of this is something that the GCs talk about a lot is disclosures, right?

And I think, Jesse, you wanted to ask something specific on that topic. >> Yeah, Commissioner, you mentioned disclosure, so I thought we could go down for a second. You know, there's the worldview out there, which I think many on this call hold, that people when given good information can make their own choices, right? But, you know, in crypto, how that looks can be very, very different because the velocity of information is just at a different level, but there's also transparency. So, I guess I would I would love to throw it to you guys on any ideas about like what does good information, I have quotes going up, look like in crypto, and does it look different than it does in traditional financial markets?

>> I mean, first of all, I would say the market shouldn't wait for the regulators to tell them what good information is. Like, if there's stuff that you think people uh need, you know, people should be asking for that information. I just I find it And and I think there are some now private sector efforts at sitting down and thinking about what information would you want from a token project if you're buying the token. And those those have been very helpful and informative to us, too, as we think about these issues. Um but I think it is it is a different set of information than you might want if you're just buying a share of a company.

And so I think people need to be thoughtful about that. And then as we see problems arise, that should help us think too about what the disclosure um should look like to surface those problems earlier for people. Um but I think you know, it's always important for anyone buying an asset not to buy it unless she has the information that she needs to feel comfortable buying that asset. For some people that's going to be more information than other people and I always say don't worry if you miss out on buying this asset, there will be others. So um I I really part of the the you know, the part of me that says uh

people can be responsible for themselves means that people really do have to do some work or find someone to help them do that work for them. They don't have to do it themselves, but um and and that we we have a role to play in that as a regulator, but it's not the the end-all and be-all role. But Sumera's worked on disclosure regulation before, so she probably has strong uh views on this. >> I do I I have pretty strong views on disclosure. You know, most of my career I've worked on disclosures. >> Oh, boy. >> Writing prospectuses and then reviewing them while working on the in the disclosure review office in investment management. For crypto, just like any other area, you know, the foundational disclosure questions are consistent. So

the federal securities laws approach, I think overall has been good. As Commissioner Peirce was saying, what does an investor need to know to make a decision about whether an investment is appropriate for them or attractive to them. And we want to continue to provide that information for crypto-related products. And one of the things that we've seen, I think, historically and just because there hasn't been a regulatory framework around it is this information asymmetry problem that disclosure tries to solve is especially heightened in a market where there's no requirements, right? At this point. And Commissioner Hester's point is you don't need to wait for regulation to have best practices in place. As somebody who's offering something, you want the investor to be

able to make an informed choice whether big, you know, government tells you to or not because then you're going to be able to give the consumer like meet their expectations of what they're purchasing. And so I think that's just a good practice and we have seen good private sector solutions developing around this and teams have come in and spoken to us about that and I think there's been some good work. Of course, we will have guidance in this area ultimately. The other thing about disclosure that's really exciting to me when we see the utilization of smart contracts and other technology as one of the biggest criticisms of the disclosure regime that we live in right now is that the amount of information is not digestible to the common person. Not only is it not digestible, it's not

accessible, right? It's not written in a language that a common retail investor will easily be able to appreciate. So, with smart contracts, you can definitely make a a better disclosure framework. And I'm really curious to see people will come in and push for that or advocate for that and how we'll address that in our rule making. But layered disclosure using AI to work through all of the different disclosures, making it interactive, what opportunities are there to tailor investment products for a consumer. And I think some of the smart contract demos we've seen have really illustrated exciting stuff. So, I'm really like geekish about that. I'd love to talk to any team who's been thinking about disclosure and see what

they've been building. >> You're very very very safe to nerd out on this podcast. Like we're all Yeah. And I often joke that on your language point, I often joke that people think I'm smarter than I am because I speak multiple languages. Like I speak lawyer and I speak crypto tech. But you're right, those languages are intimidating to the average retail consumer, 100%. So, I know V has a question and we're going to shift topics in a minute, but because we're at our halfway point, I want to take a minute and hear one more word from our sponsors that make this podcast possible.

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To learn more and start building real traction today, visit multichainadv.com. >> And we're back talking about how some of us still like to read things on paper. So, there is your elder millennial perspective from some of us. But, I'm going to turn it over to V, who is going to ask our SEC visitors a couple different questions. >> I I still read all my books like paperback or like I I tried the iPad for a while. I was like, "No, thanks."

>> The smell and feel of a book is >> There's nothing like it. There's no substitute. >> Um, so shifting gears just for a second, um, we wanted to talk to you about the the CFTC-SEC harmonization initiative and the MOU that was recently announced. It's funny because, um, so I work at Veda and we we were going to make a submission, um, with recommendations around how to modernize the custody rule. We were just going to submit it to the SEC originally and then do a separate one to the CFTC at some later point. And then you guys announced the MOU, and so we went back and we like revised our letter and just decided to do like a submission jointly.

And I was like, "This is so much more efficient because the safeguarding objectives of both like the SEC's custody rule and the CFTC's like customer property, um, segregation requirements are basically identical. So, I think that makes a lot of sense." But, one question we had was, "What happens if the two agencies disagree about something, like how to classify a token, uh for example. Like, do you guys Have you thought about how you would resolve these sorts of disputes? >> I mean, I think right now, we're both looking at it as um a very necessary process to have in place, cuz I think we've both seen in

the past, if you don't if you don't have some sort of process where you're talking to each other routinely, you can get into a situation where one agency thinks that something is in is in its jurisdiction, and then the product is out there, and the other agency says, "Hey, wait a minute. I don't want that product to be out there, cuz I think it's in my jurisdiction." And that's really disruptive to the market. So, I think the thing about these two chairmen is they're both very committed to sensible approaches, and they're not territorial in the sense that they don't feel they need to have everything within their jurisdiction. Um I back in the day, I worked with Brian Quintenz, who was then a CFTC commissioner, on harmonization around security-based swaps and swaps, which

are two regimes that came out of Dodd-Frank. And um I think it was very evident at the time. He was great to work with, but I think it was evident at the time that having a more formal mechanism in place could be helpful just to build those habits going forward. And that's where I think, you know, is there going to be a formal dispute resolution mechanism? I mean, maybe you could go you could you could take your case and bring it to to a a neutral third party, if you wanted. But I I think there's there's real commitment at the top to build just habits of saying, you know, at some point, someone is just going to have to say "Okay we'll stand down. Maybe you can have an an agreement where we get some information about a product, but we

don't necessarily have the primary regulatory authority for that product." So, that's how I kind of see it working out. Um and I you know, I just don't want to be in a world where we're both taking outward-facing positions that conflict because that's really confusing to people. >> So, I'm so happy we're past that because I remember, you know, in the previous administration, I was chief legal officer of a spot exchange where we were listing only five assets, but it was very difficult when, you know, the SEC was taking one position and we also had a DCM and a DCO, so our regulator was taking a different position. So, I'm heartened by the fact that we are past that. I love to see the coordination um and kind of communication between the

two agencies. I think that's, you know, I I really want to applaud um both the CFTC and the SEC for that kind of ongoing uh cooperation. >> But, this is the moment, too, for people to help us with that and bring us issues that they see that are rising where there is or has been a conflict in the past and help us to figure out how to work through those. >> Yeah, when I When I was in house, I was dealing with both agencies as well and there are issues around duplicative reporting or other things that are redundancies and so you see that as an external practitioner, but internally, too, we have inefficiencies that I hope that this closer relationship will help solve both for cost-effective measures that we can take moving forward, but

then knowledge sharing, right? We know that in this area especially, there are limited minds that have really spent a lot of time and so if we can share our intellectual um capital, too, that's a great thing. Right now, we're in like an ideal environment, right? Chair Gensler has joined on to Project Crypto. Him and Chair Atkins have a great relationships. We are not always going to be in an environment where the two chairs are as closely aligned or have such a great um personal relationship and professional relationship as this. And what we always want to be thinking of when we're thinking about protecting our institutions is what does this look like in a different environment? What are other steps that we can take that the legacy of the work and the foundation

we're laying for this partnership is is um is is kept. And one of those things is you can't rely just on two people, right? So we're having a lot of cross-agency staff engagement as well, making sure that people at the SEC can talk to their CFTC counterparts and build those relationships because staff is going to outlast administrations in most cases and you want to make sure that on a staff level you also have that harmonization effort and cooperation. And I think right now we're able to leverage that opportunity.

>> You know, unless you've worked in government or very closely with government, I don't know if you fully appreciate how hard it is to get agencies to work together. And so there's a lot of conversations about collaboration or harmonization, you know, at DOJ we talked to Treasury a lot and vice versa, but actually seeing it happen is a pretty wow moment. So um I'm glad to see that you're thinking about it not just at the, you know, top tiers, but also at the staff level that will definitely continue on, will hopefully continue on um as the ecosystem continues to develop as well.

>> And speaking of continuing on, like this we we want to talk for a few minutes about your legacies, but that continuing on raises a an important question. Now both the CFTC and the SEC have referenced the term future-proofing on a number of occasions. And this is obviously an area of extreme angst for crypto, to be honest, in that I think a lot of the GCs are considering, okay, this is fantastic, we have something to work with, but in 3 years everything could change. And this is not a political or a partisan question, to be clear. I think the three of us all share the opinion that this industry should not be partisan. This is about the technology.

It's more just about the long-term strategic sustainability of the guidance that's being produced. As you know, even commission-level guidance can be changed by a new and different commission. How do you think about that as you operate um kind of how do you think about executing future-proofing mechanically? >> I mean, one thing is to to do rule-making, which certainly um sits it it's it's more difficult to to to depart from a rule. Um and then legislation is is the best durability.

Um so we we hope for that. Um but I guess the the other thing I would say, and I I say this a lot, but I think it really is an important message, the more people are actually using your products and services, the harder it will be for any new administration to change. And so this is the moment where um you should be really trying to build stuff. Do you know, time flies, right? And and and I knew that if the administration changed, there was going to be a short window to get stuff done.

And you know, in retrospect, would I have liked to have a full package of rules and and and guidance documents and things ready to go? Sure. But part partly I needed to get the input from people. Um and that really wasn't going to come until there was a real prospect of um of actually putting some of this stuff in place. So we are working as fast as we can, but people on the outside need to be using this time wisely to build useful stuff, stuff that people want to keep around. Yep.

>> Absolutely. >> And honestly, since the day that the task force launched, I've been obsessed about you know, this question because what you don't want is an environment in which what tends a millions of dollars of staff time is just flushed down the toilet because of a change in the winds, right? And there's various ways you can protect against that. And one of the ones that I'm really proud of the task force being really mindful of is this was not just a 10th floor initiative. This is not a CTF initiative. This is a framework that's being built by this building. And so again, when we leave, when leadership changes, if staff has been involved across every policy

division, across other relevant divisions and offices in this building, and they understand the work they're doing and they're applying the same rigor and questions and processes that they would for any other asset class, I think it's important not to get too hung up in the fact that this is crypto. This is just another area, you know, certain parts of it that the SEC oversees, and as our job as public servants is to create a framework that industries can rely on, that investors can then invest in with the confidence of knowing that there's regulatory protections. So, it is important to note that this is not really it shouldn't be and isn't political at all because this is something that is being driven by the

mission of this building and then the staff of this building who are here, you know, hopefully 5, 10, 15, 20 years down the road. >> Absolutely. >> for people who don't have SEC insider knowledge, the 10th floor is where the commissioners sit. So, um we often just refer to to it with that shorthand. Um but I think, you know, something Sumera said really does deserve underscoring, which is that we have a task force, which is wonderful and has great people on it, but it's relatively small and the bulk of the work that's being done is being done by staff throughout the SEC, and they have really jumped in um with the intellectual curiosity and and

um you know knowledge and expertise that that has been sitting there all the time untapped. Um and so it's really fun to see them and to work with them on these things. Um and we have lively debates in the building, too, which is great as we should um because we we really want to get to the right place. >> I love that. I love a good intellectual debate. It's spicy and then you walk away as friends. Um so I I think I would like to shift to your personal legacies, both of you. I do just want to call out uh Commissioner Peirce, if you ever decide to run for office, I will leave my job and run your campaign. I'm just putting it out there because we

>> No no politics. >> Or I know there's zero chance of that, but I just want to put it out there cuz we need more people like you and I was really inspired by comments you made at an Illinois Blockchain Association function about the need to engage in debate and part as friends. Um I think that's so important. I think occasionally in certain areas we've lost the thread there. Uh I hope to see more of it. I hope to see that with whatever you do next, but I will turn over to Veda some specific questions about your legacy.

>> Yeah. Yeah, so I I know we're wrapping up here, but um I think it was like a year and a half ago I was interviewing you, Commissioner Peirce, and I asked you what you thought your legacy would be or what you wanted it to be and you demurred. So, I'm going to ask it in a slightly different way this time and for you, too, Sumera, what what do you think you're going to walk away um the proudest of during your time at the SEC? >> I mean, honestly, it is the people that I've that I've hired to help me do stuff, of whom Sumera is one of them.

So, I mean, I I would say I just um you know, these are people who have poured themselves into whether it's crypto or other things that I've worked on here. Um and and um I've just been blown away by how talented they are. So, that is the thing I'm certainly proudest of. >> Well, Asumer uh that that raises another question. And by the way, Jesse's quiet because she's in weak internet. So, we're missing the Jesse Brooks fight. >> you. >> The Jesse Brooks rant of the day. We're we're going to have missed that for um this podcast episode. But, you know, Sumera for your own work at the commission, what does the task force look like after Commissioner Peirce leaves? Like, how are you feeling about

this transition? >> Before we get into that, I need to take a moment to say Commissioner Peirce will never speak about her legacy because she's one of the most humble and modest people you will ever meet. She'll be mad at me for it now going into this, but it has been the honor of my life to serve for her. Her legacy is she has I don't want to cry, but you have set the standard for what a public servant should be. I have never met a person with more integrity, with more intellect, and more humility in the work that they do. The task force could not exist without her leadership and the confidence people had in her. That is why they responded to her request for information. That is why they engaged

with this building because she has been a beacon of light uh for so many of us. She has modeled courage and integrity, and I will benefit from that any step I take moving forward. I'm so grateful for that and for your friendship. Um >> Well, that's very kind of you to say, but as you said >> refute. There's no rebuttal for this. You must accept humbly. >> No opportunity to comment, Commissioner Peirce. >> We're out of time. >> We're all just crying over here, so. >> I am teary-eyed um and the moment has not even come, but the task force it has a strong strong foundation in the work of the staff in this building that will continue on no matter what it looks like

and whoever fills um that unfillable seat over there. So, I'm confident that, you know, the the work is going to go on and we will complete many of the important you know, projects that we began here. >> I I love to hear it and you know, we are going to wrap in a minute with our crypto good news of the week which we always like to feature. But before we do that, I wanted to give both Sumera and Commissioner Person opportunity. Anything else you'd like to convey to our listeners to kind of crypto market participants at this point in time.

>> I mean, I one, I'm a big fan of the show so so I enjoy enjoy listening to you guys. But um second, I I think it's the point that Sumera has been making which is that we really want to hear from people at each stage of the process and so um please do continue to engage with us. That's the only way that we can get to a good place. There are some controversial issues coming, right? We can see that in the written input that we're getting. Um you've got strong views on all different sides. Um and so we may not make everyone happy, but um but we're we are trying to get to the right place and it's iterative. So, if you don't like what we've done, if you think we need to take a step further, come talk to us, explain

to us the the legal basis for what you're doing and the practical and commercial realities of why what we've done is too limited. Please, you know, help us to to continue to shape the next step. >> And my message is just something that, you know, I had to say to myself a lot over the last 7 years. But for everyone who's building in this country, like never give up. There will be doors and then there will be walls and that will always be the case. You have to keep going. You have to believe in what you're making.

That's what makes America the best place in the world. We have people who are not afraid to build and create and innovate and dream of a world that is even better than the one we live in and that happens because of builders. So, keep going. >> Samira, I think you need to run for office. >> narrative >> You're not allowed to talk about politics. I would never. >> That was very inspiring, but we're not allowed to talk about it. >> It's an ugly business. You know, Well, I I can't tell you how much we appreciate both of your time, your expertise, um, and you're both incredibly inspirational to not just women frankly people

uh, and but particularly women. It's such a honor to continue to highlight, uh, you know, prominent, responsible women with integrity who have an impact on this space. Um, so, I'll just take 1 minute to highlight our crypto good news of the week and then we'll say goodbye to our guest, but speaking of women, uh, I we just wanted to call out the Eve Wealth Summit, which is happening in a couple weeks. Uh, all three of your co-hosts will be speaking there and the reason why this summit is awesome and I think we provided a a picture to put on the screen, but when you look at the speakers of the Eve Wealth Summit, the the most important takeaway of this the summit is it looks like your average crypto conference, but the gender is

reversed. Like, there are a few men, well-qualified, I guess, like, you know, Chris Giancarlo and a few others speaking at the summit, but this summit, it's the second annual, it's, you know, designed to support a powerful community of women and allies driving diversity in digital assets. So, we just wanted to call out, you know, kudos to Eve Wealth and this summit for really highlighting the high caliber of women who can and, you you are happy to speak with authority and insight on digital assets. So, with that, I will say goodbye to Samara, Commissioner Peirce. Thank you so much for joining us. Thank you to our listeners, and we will see you next week on Daks in the City.

>> Thanks for having us. >> Thank you.